Question
LMN Company is considering investing in a project that requires an initial outlay of $50,000. The project is expected to generate the following cash flows:
- LMN Company is considering investing in a project that requires an initial outlay of $50,000. The project is expected to generate the following cash flows:
Year | Cash Flow (USD) |
1 | 10,000 |
2 | 20,000 |
3 | 30,000 |
4 | 40,000 |
5 | 50,000 |
Requirements: a. Compute the payback period for the project. b. Calculate the NPV of the project assuming a discount rate of 12%. c. Based on NPV, should LMN Company proceed with the project?
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Accounting What the Numbers Mean
Authors: David Marshall, Wayne McManus, Daniel Viele
11th edition
1259535312, 978-1259535314
